Economists Say Outlook for Apartment Finance Sector is Mixed
Multifamily Executive
...Dr. Richard Green: Renters Will Evolve as Households Change
Thanks to the Great Recession, households have dramatically changed, said Dr. Richard Green, director of the USC Lusk Center for Real Estate. "The types of families today are different," he said, referring to the increase in Echo Boomers and multigenerational households.
In addition, he points to household balance sheets, as well as the incomes and credit scores of renters. "The average 50-year-old today has a mortgage that is twice his income. Twenty years ago, that figure was equal to the mortgage," Green said. "This means that when that individual retires, he will have to move. And where will he move? Into an apartment."
What's more, Green continued, the average income of apartment dwellers in 2007 was just under $30,000, which yields just below $800 per month available for rent. Couple that with FICO scores that have been decimated thanks to foreclosures and defaults on the credit reports of former home owners, and the ability of renters to pay rising rents in a shrinking economy and state of perpetual unemployment has been significantly reduced.
"There needs to be greater attention paid to rental housing now," he added. "The housing myth has been shattered."...